Ivy League Schools Use Endowments Effectively to Make the Very Rich Even Richer

The New York Times reported on an analysis of returns on the endowments of the Ivy League schools over the last decade. It found that all the schools endowments lagged a portfolio that was 60 percent stock index funds and 40 percent bond funds. (The gap with index funds would be even larger if the mix were 70 percent stock, 30 percent bonds.)

The Ivies invest heavily in hedge funds, which typically charge fees equal to 2 percent of the money invested plus 20 percent of returns over a benchmar...